Duncan v Aljayar Pty Ltd

[2010] NSWADT 224

CITATION:	Duncan v Aljayar Pty Ltd [2010] NSWADT 224 This decision has been amended. Please see the end of the decision for a list of the amendments.
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Peter Duncan and Andrea Duncan RESPONDENT Aljayar Pty Ltd
FILE NUMBER:	105061
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	5 August 2010
DATE OF DECISION:	13 September 2010
BEFORE:	Fox R - Judicial Member
CATCHWORDS:	Unconscionable Conduct
LEGISLATION CITED:	Retail Leases Act 1994 Administrative Decisions Tribunal Act
CASES CITED:	Attorney General of New South Wales v World Best Holdings Limited & Ors [2005] NSWCA 261 J V Idola Pty Ltd V Lovecek [2009] NSWADT 258
REPRESENTATION:	APPLICANT P O’Loughlin, solicitor RESPONDENT S Macedone, solicitor
ORDERS:	Matter to proceed as Combined Retail Tenancy and Unconscionable Conduct Claim

REASONS FOR DECISION

Preliminary Decision – Unconscionable Conduct Claim

1 The Applicants seek damages of $82,467.16, interest and costs, arising out of the termination of their occupation of bar and restaurant premises at Cronulla. The lease, which commenced in February 2006 and was for a term of 3 years with a 3 year option , was assigned to the Applicants in March 2007.

2 The Application shows 6 grounds, the fifth of which claimed unconscionable conduct being :-

“The Respondent had no proper grounds to refuse consent to assignment of the lease and refused consent for a purpose other than the legitimate business interests contemplated by the lease and the Retail Leases Act
. Particulars
1) The financial resources and retailing skills of the proposed assignees were not inferior to those of the Applicants”

3 Pursuant to the Tribunal’s practice as detailed in J V Idola Pty Ltd v Lovecek [2009] NSWADT 258, the Applicant was required to file and serve particulars of the claimed unconscionable conduct, and did so on 4th August 2010. The Respondent appears to have elected not to file any matter in response to those particulars.

4 A summary of the Particulars is that the Applicants’ goodwill and equipment were agreed to be sold to Messrs Laturiuw and Thitiprasert for $82,000.00; the Respondent as lessor refused to consent to the assignment on less than proper grounds (and presumably in breach of s39 of the Act) terminated the Applicant’s lease, and then let the premises to the same Messrs Laturiuw and Thitiprasert.

5 This decision is made in accordance with s24A(2) of the Administrative Decisions Tribunal Act.

6 I stress that my function in this preliminary process is not to evaluate the evidence, it is to establish whether the evidence proposed by the Applicant, if proven at its’ highest, could amount to the conduct proscribed by s 62B.

7 As I indicated in Idola, the touchstone is the words of the Chief Justice in Attorney General of New South Wales v World Best Holdings Limited & Ors [2005] NSWCA 261

‘The matters to be considered under a retail tenancy claim, turning on contract and well established doctrine, were intended by Parliament to continue to have considerable scope. The Parliament was careful to ensure that the amorphous and ambiguous term, “unconscionability”, did not come to completely override the legal rights and obligations created by the lease relationship. Parliament did not intend that “unconscionability” claims could be made so readily as to virtually take the place of retail tenancy claims. They needed to meet a high standard of moral obloquy”.

8 I also indicated that I took that to mean that if the Act gave a remedy for retail tenancy claim, then the conduct which constituted that claim should be dealt with as such and should not be dealt with as a claim under s 62B. This was made in the context of the Idola facts which showed absolutely no prospect of falling within the “highly unethical” description. Further, such conduct as might have had some prospect of being described as within the rubric, came before the entry into the lease, and so would have been presented with an adequate remedy by s10.

9 The same does not apply to the matter raised by these particulars. They are clearly capable of description as highly unethical, and so should not fall within the “restriction” I set in Idola, because it would not be proper to deny a party who complains of such conduct the opportunity to ventilate it in pursuit of a remedy

10 It has to be borne in mind that the unconscionable conduct claim comes in an Application seeking remedy for both retail tenancy claim and unconscionable conduct. It has to be viewed in that context, and although some of the other claims made may properly fall within the scope of a breach of s39,(and so do not need to call s62B in aid), there is always the possibility that a technical requirement raised by s39 may not be proven, and in that event it would be totally inappropriate that the Applicants be denied the opportunity to pursue the rights given them by s62B.

11 It follows that I should “re-state” the Idola “restriction” to be :-

“If the Retail Leases Act gives remedy for a retail tenancy claim then that is how it ought to be dealt with, and, absent allegations having a reasonable prospect of establishing highly unethical conduct , it should not be allowed to venture into the more rarefied atmosphere of unconscionability”.

12 That prospect being the case here, I direct that the matter proceed as a combined claim; if it proceeds to a hearing it will be heard by a Panel.

21 September 2010

Addendum :Pursuant to s81of the ADT Act, in the interests of justice, and exercising my discretion under s87, I make the following further observations.

Contrary to what I said in paragraph 3, the Respondent, on 6th August 2010, did file submissions in response to the Applicant's particulars. Unfortunately these had not found their way to the Registry file when I made my decision.

I have now carefully considered these submissions, and note that they point to allegations that the Applicant was in breach of the lease as justifying the Respondent's actions, and propose that those actions, even if improper, would not fall within the requisite high standard of moral obloquy postulated by World Best Holdings. That submission seems to me to miss the point as made in paragraph 6. My function in this interlocutory decision is not to finally evaluate the evidence, it is to establish if the conduct particularised, if proven in evidence, could fall within s62B.

Nothing raised in the Respondents submissions changes my view as expressed in paragraphs 9 and 10.

21/09/2010 - Addendum added - Paragraph(s) end of decision